Sapporo Holdings Ltd.

Transcription

1 2012 Sapporo Group Business Results Presentation for the Three Months ended March 31, 2012 May 9, 2012 Sapporo Holdings Ltd. URL Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved. 1/25

2 Contents 1. Progress of Implementation of 2012 Basic Strategies 2. Overview of First-Quarter 2012 Results 3. Supplementary Information to First-Quarter 2012 Results Reference: Management Targets /25

3 1. Progress of Implementation of 2012 Basic Strategies 3/25

4 Progress of Implementation of 2012 Basic Strategies We promoted three basic strategies for achieving dramatic growth We will leverage the strengths of our various business s brands and management resources to accept new challenges to beat the competition To realize the fruits of the various initiatives undertaken in recent years, we will continue to make forward investments and take steps to strengthen the business foundation We will continue to aggressively pursue M&As and alliances both in Japan and overseas I. Accepting challenges leading to growth in all businesses See the segment pages under Supplementary Information to first-quarter 2012 Results III. Create new growth opportunities On January 31, we acquired a 15% stake in M s Beverage Co., Ltd., a wholly owned alcoholic beverage distribution subsidiary of Maeil Dairies Co., Ltd. for approx. 51 mn to boost Sapporo s brand value and strengthen our product distribution network in South Korea. *A non-equity method affiliate II. Steadfastly implement growth measures On March 1, we acquired 15% of trust beneficiary rights for Yebisu Garden Place from the joint holder in the complex for 40.5 bn to initiate steps for boosting its value. *Started taking in profit/loss items from March On March 30, we established POKKA SAPPORO FOOD & BEVERAGE LTD. as an entity to drive forward integration and began preparing business strategies for starting the business in January On January 31, we acquired 51% of outstanding shares in From April, started to air TV commercials in Vietnam, where we Silver Springs Citrus, the largest U.S. maker of private-brand chilled drinks, from the Toyota Tsusho Group for approx. 1.8 made a full-scale entry this year, marking the launch of fullfledged marketing activities bn to make a full-scale entry into the U.S. beverage business. *Started consolidating the profit/loss items from April 4/25

5 2. Overview of First-Quarter 2012 Results 5/25

6 Overview of First-Quarter 2012 Results -Special Factors- Breakdown of special factors does not allow meaningful comparisons between net sales and operating income for the first quarter of 2012 and the same period a year earlier See the Supplementary Information to our Earnings Report for factors behind changes resulting from other business activities Net Sales <Food & Soft Drinks: POKKA Group> We started adding the profit/income items from April 2011 and this meant net increase for the Jan-Mar period bn Change to accounting policy: changed from delivery basis to arrival basis for recording sales bn <Real Estate> Started reflecting the profit/loss items from March for the acquisition of 15% of trust beneficiary rights for Yebisu Garden Place from the joint holder in the complex bn <Total> bn Operating Income <Food & Soft Drinks: Sapporo Beverage> In April 2011 we started goodwill amortization for the acquisition of shares from Crescent Partners after it converted CB holdings, and goodwill amortization was a net increase in the Jan-Mar period of bn <Food & Soft Drinks: POKKA Group> Started reflecting the profit/loss items from April 2011, resulting in an operating loss for the Jan-Mar period of bn Started reflecting the profit/loss items from April 2011 and goodwill amortization resulting from the integration of POKKA Group was a net increase in the Jan-Mar period of bn <Real Estate> Acquired 15% of trust beneficiary rights for Yebisu Garden Place from the joint holder in the complex and reflecting the profit/loss items from March bn <Total> bn 6/25

7 Overview of First-Quarter 2012 Results -Consolidated- Sales increased significantly due to recovery of Japanese Alcoholic Beverages and Restaurants, which were directly affected by the earthquake in 2011 as well as the special factors discussed in the previous slide. Despite profit increase at Restaurants on increased sales, overall operating income decreased by 2.2 bn compared with the same period a year earlier due to increased investment by International Business for development of the Vietnam market and decrease in Real Estate s sales of commercial properties in addition to the special factors described in the previous slide. Net income improved 2.1 billion, despite the fact that extraordinary losses increased by 3.7 billion (including a 1.0 bn loss due to asset retirement obligations and a 1.9 bn loss stemming from the disaster, etc.) (billions of yen) *The 2011 first quarter consolidated net sales figure lacks continuity with the figure announced last year due to retrospective adjustment of past years from the first quarter YoY changes Q Q Amount % Consolidated net sales Consolidated operating income Consolidated operating income before goodwill amortization Consolidated ordinary income % (3.3) (5.5) (2.2) (3.0) (4.6) (1.6) (4.0) (5.8) (1.7) Consolidated net income (6.2) (4.1) 2.1 7/25

8 Overview of First-Quarter 2012 Results -by Segment- Operating Income YoY changes Q Q Amount % (billions of yen) Japanese Alcoholic Beverages (4.0) (4.8) (0.8) International North America, other Vietnam (0.1) 0.0 (0.2) (0.4) (0.0) (0.4) (0.2) (0.1) (0.2) Food & Soft Drinks Sapporo Beverage POKKA Group Before GW amortization (1.2) (0.3) (0.9) (0.6) (1.3) (0.4) (0.9) (0.7) Restaurants (0.7) (0.2) 0.4 Real Estate (0.2) -10.5% Other (0.1) (0.0) 0.0 General corporate (0.6) (0.6) (0.0) Consolidated operating income (3.3) (5.5) (2.2) Consolidated operating income before GW amortization (3.0) (4.6) (1.6) 8/25

9 Overview of First-Quarter 2012 Results -Strategic Investments- Implementation Status of Strategic Investments (excl. ordinary capex) <Acquisition of stake in Silver Springs Citrus> On January 31, acquired 51% of outstanding shares in Silver Springs Citrus, the largest U.S. maker of private-brand chilled drinks, from the Toyota Tsusho Group to make it a consolidated subsidiary Started consolidating the balance sheet from the end of March and profit/loss items from April The cost of the share acquisition is approx. 1.8bn Net financial liabilities were approx. 0.7bn Total investment is approx. 2.5bn <Acquisition of shares in M s Beverage> On January 31, acquired a 15% stake in M s Beverage Co., Ltd., a wholly owned alcoholic beverage distribution subsidiary of Maeil Dairies Co., Ltd.(non-equity method affiliate) The cost of the stake acquisition is approx. 50 mn Total investment is approx. 50 mn <Acquisition of 15% of trust beneficiary rights in Yebisu Garden Place> Acquired from the joint holder on March 1 The investment for the acquisition is 40.5 bn, the purchase price At the end of March recorded the 40.5 bn on the balance sheet (fixed asset account) Started to reflect profit/loss items from March Total investment is approx bn <Implementation status of strategic investment from Jan to Mar 2012> Approx. 43.1bn Credit Ratings <Announcement of the acquisition of 15% of trust beneficiary rights for Yebisu Garden Place> On December 26, 2011, issued a press release that we acquired the rights from the joint holder for 40.5 bn <Credit rating by JCR> On February 16, 2012, JCR issued a press release saying that it kept the A- (stable rating on Sapporo Holdings unchanged. <Credit rating by R&I> On March 15, 2012, R&I issued a press release saying that it kept the BBB+ (stable) rating unchanged. <Achievement of low-cost finance> In March issued five-year straight bonds worth 10 bn at a low cost Direction of Long-term Strategic Investments We will continue to actively carry out strategic investments for growth We expect to make 150 bn to 200 bn worth of strategic investments from 2012 to 2016 Including ordinary capex (worth about a half of the strategic investments) Strategic investments as a rule to be implemented within the size of operating cash flow Strategic investment for 2012 is planned to be approx. 64 bn 9/25

10 3. Supplementary Information to First-Quarter 2012 Results *For information on each business s profitability, please also see the Supplementary Information to our Earnings Report 10/25

11 Results highlights Sales increased reflecting strong sales of the three core brands and rebound from the direct impact of the earthquake. Operating income declined due to increased burden of fixed cost during the down period for the loss caused by the disaster in 2011 in addition to up-front investment of marketing cost aimed at achieving a multi-layered structure. Key points in business plan: implementation status 1. Bolster brand strength by focusing management resources on core products Bolstering brand strength by concentrating resources on the three core brands of Sapporo Draft Beer Black Label, Yebisu Beer, and Mugi to Hop as well as on Premium Alcohol Free, non-alcohol beer-taste beverage In spite of the rebound from the direct impact from the earthquake disaster, we achieved YoY volume growth for those brands for the Jan-Mar period exceeding general demand in the period by focusing on them. Total shipments of Sapporo 95 beer, happoshu, and new-genre beer products were 103.0% compared with the same period a year earlier, outperforming the general demand of 102.6%. In the Jan-Mar quarter Premium Alcohol Free increased 25% year over year, significantly exceeding the level in the same period a year earlier, but falling short of the plan partly due to the market inflexibility. The target for Mugi to Hop Black was revised upwards to 3 million cases (large bottle count), double the initial target. Premium Alcohol Free Black, the world s first non-alcohol black beer taste beverage to be launched on May 23 The plan: 350,000 cases (large bottle count) Japanese Alcoholic Beverages (1) *Incl. liquor taxes (billions of yen) Year-over-year changes Q Q Amount % Net sales* % Operating income (4.0) (4.8) (0.8) YoY sales volume for Jan-Mar (Yebisu Beer and Black Label - total beer demand; Mugi to Hop new-genre total demand) *Mugi to Hop includes Mugi to Hop Black Sapporo General demand Yebisu Beer Black Label Mugi to Hop* Beer, happoshu, new-genre Launch Schedule May 23 11/25

12 Japanese Alcoholic Beverages (2) Key points in business plan: implementation status 2. Laying the groundwork for growth in expanding areas RTD-related actions <Sapporo s first year of promoting Ready To Drink products> Jan. Launched CJ Oishii Makgeolli Pink Grapefruit, developed jointly with No.1 Korean foods maker CJ Cheiljedang Feb. Launched Triangle Ginger Highball Strong Feb. Launched a limited release of Sapporo Nectar Sour Sparkling Cassis & Peach Mar. Launched a renewed version of Sapporo Nectar Sour Peach Sparkling Mar. Launched Sapporo Nectar Sour Mix Sparkling April 25 Launch the world s first canned Bacardi Mojito based on the world s top brand rum April 25 Launched Japan s first Bacardi Cuba Libre based on the world s top brand rum Launched April Expand sales of wine, western spirits and shochu Wine Both imported and Japanese wines achieved year-over-year volume growth and increased sales and profits Imported wine: Growth in Yellow Tail and low-cost wines Japanese wine: Growth in large bottle, additive-free and functional wines Western Spirits Signed sales agreement with No.1 Korean foods maker CJ (CheilJedang) Group. Launched CJ Bonga Makgeolli in July 2011 in the industrial-use market Entered into alliance with Bacardi Japan, supplier of world No.1 rum brand. Started sales of 90 items across 29 brands in October Launched Bacardi Classic Cocktails Mojito, Japan s first Mojito base that can be served with soda, on April 13 Various products under the above two brands contributed to to growth in sales volume Shochu Achieved year-over-year volume growth and increased sales and profits Strong sales in singly distilled Waramugi and Karariimo Kuroumesyu also contributed to rise in sales volume 12/25

13 International Business(1) Results highlights Sales rose 7.5% YoY, even though yen appreciation erased gains in local currency terms, especially in North America. Operating income fell due to the impact of expenses related to building the Vietnamese market. Key points in business plan: implementation status 1. North American business growth Sales in local currency (Jan-Mar) Sleeman 14.8 Sales in local currency (Jan-Mar) USA 55 Net sales % Operating income North America, others Vietnam SLEEMAN (Canada) Sales expanded on increased investment in marketing of premium brands Sales growth higher than that for total demand in Canada Sapporo USA (U.S.) Expanding from the Japanese- American market into wider US and Asian-American markets USA ($ millions) Unit sales (YoY) SLEEMAN brand 104% 110% Canada total demand approx. 99% billions of yen Year-over-year changes Q Q Amount % (0.1) 0.0 (0.2) (Jan-Mar) (0.4) (0.0) (0.4) (0.2) (0.1) (0.2) 6 th straight year of Year-on-Year volume growth! approx. 99% Unit sales (YoY) Silver Springs Citrus (U.S.) Acquired a 51% stake in Silver Springs Citrus, USA companies 124% 86%* US total import beer demand approx. 113% approx. 96% the largest U.S. maker of private-brand chilled drinks Full-fledged entry into beverages business in the North American market Started consolidation of profit/loss items from April (Jan-Mar) *Reflecting the impact of demand in anticipation of price increase in April /25

14 Key points in business plan: implementation status 2. Expansion in Asian market (incl. Oceania) Developments in Vietnam Full-fledged entry of locally produced beer in the market from end of February 2012 Started full-scale marketing in the country including through billboards and TV commercials Local billboards in Vietnam Developments in Singapore Expanding imported beer sales in local household market in cooperation with POKKA Corporation (POKKA has top share (70%) in local green tea-based drink market) Sales for 2011: 52,000 cases (large bottles) 21.4% YoY growth International Business(2) TV commercial based on the marketing concept Grab the Glory Sales target for 2014: 100,000 cases (large bottles). Bolster sales channels for achieving the target Developments in South Korea Strengthened Sapporo brand value and sales structure in South Korea by acquiring a 15% stake in M s Beverage Co., Ltd., a wholly owned liquor sales subsidiary of Maeil Dairies Co., Ltd. (which has top shares in cheese, low-fat milk, and chilled coffee drinks), signing the agreement on Jan 31 A non-equity method affiliate 2011 sales: 230,000 cases (1 case = 350ml 24 bottles) *Initial target: 300,000 cases (Though sales were affected for about two and a half months due to the disaster, we achieved about 2/3 of the target.) Sales targets: 380,000cases in 2012, 1.5 million cases in 2015(1 case = 350ml 24 bottles) Aim to become the No.1 imported brand. Developments in Oceania In October 2011, entered the Australian/New Zealand premium beer market via licensing agreement with Coopers Brewery Ltd. (No.3 in Australia s beer market, No. 2 in premium beer market with a 17.3% share) Full-fledged entry from 2012: aim to be the top Japanese beer brand Sales targets: 160,000 cases in 2012, 500,000 in 2016 (1 case = 355ml 24 bottles Silver can produced in Canada to be replaced with Vietnamese product from /25

15 Food & Soft Drinks Sapporo Beverage Results highlights billions of yen Sales volume in 1Q declined to 91% of the previous year Year-over-year changes against a overall demand rise to104%, partly due to the impact of special demand for Japanese drinking water following the disaster last year with March sales falling to Q Q Amount % 85% of the previous year. Operating income fell along with the decline in sales volume. Net sales 6.6* 6.3 (0.3) Key points in business plan: implementation status Strengthening/cultivation of competitive brand Concentrating investment on important categories and brands Ribbon: -9% YoY growth In March, launched Ribbon Napolin Ice, a collaborative product with Akagi Nyugyo Co., Ltd., in Hokkaido Raised awareness by airing a short animation of Ribbon - chan on TV from April Gabunomi: -11% YoY growth Re-launched the product in the latter half of March and carried out a promotion campaign with free gifts to ensure wider sales reach and market penetration from April Gerolsteiner: 3% YoY growth Carrying out promotion campaign with free gifts from April to further promote trials and build repeat customer Other brands Oishii Tansansui: 17% YoYgrowth Growth on the back of demand for alcohol consumption at home Continued focus Operating income Before GW amortization *After retrospective adjustment (0.3) (0.0) (0.4) (0.2) Synergies with Kyodo Milk Industry Co., Ltd. Re-launched in April Chousyoku Fruits, the first collaborative product introduced in April 2011 It has evolved into a functional fruits drink with 2,000 mg vitamin C per pack (equivalent to 100 lemons) Launched plum flavor, which is associated with spring and summer as well as a healthy image, to complement standard offering of orange, apple and grapes. Synergies with POKKA Corporation Synergies led to cost savings of 66 mn in Jan-Mar ( 4 mn increase YoY Synergies from joint procurement and consigned production 15/25

16 Food & Soft Drinks POKKA Group (1) Results highlights New consolidation from April 2011 makes YoY comparisons meaningless, but comparisons based on figures below show sales were boosted by contribution from Domestic Restaurants through revitalization of existing CAFÉ de CRIE outlets and strengthening of leading shops. Besides Domestic Restaurants, Overseas Beverage/Food contributed to rise in operating income. Ref: Jan-Mar segment sales and operating income and YoY comparisons Year-over-year changes Q Q Amount % Net sales Operating income Before GW amortization billions of yen (0.9) (0.5) (0.9) (0.5) *Started consolidating POKKA s profit/loss items from Q. Before inter-segment eliminations *1: 2012 sales: Before inter-segment eliminations of 0.1 bn *2: 2012 operating income: Income before deduction of goodwill amortization of 0.3 bn following integration billions of yen Year-over-year changes Q Q Amount % Domestic Bev/Food (0.0) -0.4% Overseas Bev/Food % Domestic Restaurants % Overseas Restaurants % Other Businesses % POKKA corporate (1.1) (1.2) (0.0) Sales (total) % Operating income (0.1) (0.6) (0.5) *1 *2 16/25

17 Food & Soft Drinks POKKA Group (2) Key points in business plan: implementation status Beverage & Food Business (Japan): POKKA Corp. and six group vending machine operators 1. Beverage Business Concentrating investments in core brands Kireto Lemon Re-launched the product Started airing new TV commercial from March Aromax Launched Kyokugen no kaori BLACK, with sales limited to Tokai area, the birth place of the company Buzz generated by the advertisement featuring president and employees 2. Food Business Focused on core and growth products Kantanbimi Launched Korean-style seasonings Dashi-no-moto and Namuru-no-moto, enhancing the product lineup Pokka Lemon 100 Expanded products with the Lemonja design, which gained popularity with the 70ml bottle 3. Maintenance Plan for Nagoya Plant Finalized Construct new building inside the site to manufacture Pokka Lemon (Estimated investment: about 2.4 bn) Correspond to the growth strategy for the core business of Pokka Lemon 100 Anti-seismic work on existing building (investment of about 0.4 bn) Measures to ensure business continuity in the event of an earthquake Synergies with Sapporo Beverage Synergies led to savings of about 50 mn in Q ( 50 mn increase YoY) Synergies from joint procurement and commissioned manufacture 17/25

18 Food & Soft Drinks POKKA Group (3) Key points in business plan: implementation status Beverage & Food Business (Overseas): POKKA Singapore 1. Expand into Singapore s neighboring countries Planning and implementing measures to revitalize markets in Indonesia, Malaysia and Brunei 2. Bolster sales in existing export markets Strengthened alliances with agencies in Middle East and Europe Pokka green tea products boasting high market share in Singapore Other businesses - Ice cream business Foremost Blueseal brand (Okinawa) Exporting products to 60 countries POKKA ACE (M) SDN. BHD. (Malaysia) POKKA CORPORATION (SINGAPORE) PTE LTD (Singapore) Restaurants Business (Domestic): POKKA CREATE Co., Ltd. 1. Expand sales via growth at existing stores, chain expansion Outlets: 159 (104 in Kanto, 31 in Tokai, 21 in Kansai, 3 in Kyushu; as of end of March 2012) New outlets opened in 1Q: 1 (franchise) Effectively using remodeling plan to strengthen brand image 2. Profits up on successful efforts to lift profit ratio Improved COGS ratio Closed unprofitable restaurants Restaurants Business (Overseas): POKKA CORPORATION (Hong Kong) and POKKA Food (Singapore) Pte. Ltd. - Both existing and new outlets performed strongly in Hong Kong - Both Hong Kong and Singapore have been actively pursuing the new business format Outlets: 40 in total (as of the end of March 2012) Hong Kong 29, Singapore 10, Macao 1 New outlet opening in 1Q Hong Kong Pokka Café 1 18/25

19 Restaurants Results highlights Year-over-year increase in sales in the Restaurant Business, which was directly affected by the Great East Japan Earthquake last year. Sales for 1Q increased 13.3% YoY at existing stores, with March alone posting a 47.1% rise. In addition to this, operating loss narrowed YoY, on closure of unprofitable outlets, cost reductions and contributions from new outlets. billions of yen Year-over-year changes Q Q Amount % Net sales % Operating income (0.7) (0.2) 0.4 Key point in business plan: implementation status 1. Positioning for growth New restaurant opening strategy 6 restaurants opened in 1Q Synergy with the Japanese Alcoholic Beverage Business: Opening of Yebisu Bar outlets In addition to two new outlets in Akasaka and Tokyo Station s Kurobei Yokocho, the format of the Osaki and Ginza 2- chome outlets was changed, increasing the number of Yebisu Bar outlets to 9 as of the end of March Ginza Lion chain expansion Mid-sized Ginza Lion opened in Marunouchi Center Building Opened the Kitchen Ginza Lion, a new business format Opened a new outlet which specializes in roast beef in Lumine Ikebukuro 2 other outlets opened for total of 6 in Q All outlets are performing as planned 2. Earnings structure reform Locations closed in Q: 5 Locations operating as of the end of March 2012: /25

20 Real Estate (1) Results highlight Maintaining stable revenues despite high vacancy rates and continued fall in rents in Tokyo office leasing market Key point in business plan: implementation status billions of yen Year-over-year changes Q Q Amount % Net sales (0.3) -6.0% Operating income (0.2) -10.5% Boosting value of existing properties Yebisu Garden Place Maintain and improve occupancy rate and achieve appropriate rent levels In March, we acquired the 15% trust beneficiary rights from the joint holder to give us 100% ownership Maintained high occupancy rates and rent levels as of end-mar at Yebisu Garden Place and other major Tokyo properties (table at right) compared to the 91% average for office buildings in Tokyo s 5 central wards Redevelopment of Ginza and Ebisu Areas Redevelopment of Sapporo Ginza Building and Seiwa Yebisu Building We started planning and tenant negotiations for redevelopment of Ginza 5-chome and Seiwa Yebisu building Average occupancy of Seiwa Yebisu Building* steadily decreasing in line with the rebuilding plan (*Average occupancy rate down to 59% from 2011 average of 75%) Major rental properties in Tokyo*s 23 wards Site area (m2) Floor area (m2) Occupancy rate (%) Yebisu Garden Place *1 56, ,007 96% Seiwa Yebisu Building* 2,617 10,400 *59% Yebisu Square 1,561 9,126 83% Shibuya Sakuragaoka Square 1,200 9, % Sapporo Ginza Building 530 4,232 96% Strata Ginza *2 1,117 11,411 96% (As of March 31, 2012) No. of floors 40 floors above ground, 5 below 6 floors above ground, 1 below 7 floors above ground, 1 below 10 floors above ground, 1 below 10 floors above ground, 4 below 13 floors above ground, 1 below Site areas are taken from the land registry. Floor areas are as per building certification. Occupancy rates are averages for January March *1. Figures are for entire property. Number of floors for office wings/buildings only. Occupancy rates are for office areas only. *2: Figures are for entire property. Sapporo owns 922m2 of the site (sectional ownership) and 89.72% of the building (joint management) 20/25

21 Overview of Real Estate Business Real Estate (2) Majority of the business s operating income is from real estate leasing Property portfolio largely comprises properties in Tokyo 5 central wards: see previous page In January, we changed the name of Yebisu Garden Place Co., Ltd. to Sapporo Real Estate Co., Ltd. to raise the Sapporo brand value and strengthen Group synergies Operating Income Q Q Change(value) FY2011 FY2012 est. * Other operations includes back-office operations EBITDA = operating income + depreciation and amortization billions of yen Change (value) Real estate leasing Tokyo s 23 wards Other areas Real estate leasing total Real estate total 0.4 (0.4) (0.3) Other operations* (0.0) (0.0) (0.0) (0.3) (0.3) 0.0 Total (0.2) EBITDA Q Q Change(value) FY2011 FY2012 est. Change (value) Real estate leasing Tokyo s 23 wards Other areas (0.0) Real estate leasing total Real estate total 0.4 (0.4) (0.3) Other operations* (0.0) (0.0) 0.0 (0.0) Total (0.1) /25

22 Ref Management Targets * Management Targets are unchanged from the figures announced on February 10, /25

23 Management Targets Consolidated targets 2006 results 2011 results 2012 targets 2013 targets 2016 targets Consolidated net sales *incl. liquor taxes bn bn* bn bn bn (excl. liquor taxes) bn bn* bn bn bn Consolidated operating income (before goodwill amortization) Consolidated ordinary income Consolidated net income Consolidated operating margin *excl. liquor taxes (before goodwill amortization) 8.6 bn 18.8 bn 20.0 bn 21.0 bn 8.6 bn 21.9 bn 23.9 bn 24.8 bn 40.0 bn 5.8 bn 16.8 bn 17.0 bn 18.0 bn 2.3 bn 3.1 bn 6.3 bn 7.4 bn 2.9% 5.6%*1 5.1% 5.0% 2.9% 6.5%*1 6.0% 5.9% D/E ratio 2.1 times 1.8 times 1.9 times 1.9 times Around 1:1 ROE 2.1% 2.5% 5.0% 5.7% (before goodwill amortization) 2.1% 5.1% 8.2% 8.7% 9.0% 8% or higher *1 The 2011FY figure lacks continuity with the figure announced last year due to retrospective adjustment. *Assumed exchange rates: : US$ = 81, CAN$ = 80 23/25

24 Management Targets by Segment Net sales Operating incom e Targets 2011 results 2012 targets 2013 targets Japanese Alcoholic Beverages bn bn bn International Business 25.8 bn 37.3 bn 44.0 bn Food & Soft Drinks bn* bn bn Restaurants 24.0 bn 24.9 bn 26.0 bn Real Estate 22.4 bn 24.4 bn 24.0 bn Other Businesses 0.7 bn 0.8 bn 1.0 bn General corporate Consolidated total bn* bn bn Japanese Alcoholic Beverages 9.3 bn 10.5 bn 12.0 bn International Business 0.3 bn 0.0 bn 0.2 bn Food & Soft Drinks 3.6 bn 3.0 bn 3.1 bn Restaurants 0.2 bn 0.6 bn 0.8 bn Real Estate 8.5 bn 9.3 bn 8.6 bn Other ( 0.6 bn) ( 0.4 bn) ( 0.4 bn) General corporate ( 2.6 bn) ( 3.0 bn) ( 3.3 bn) Consolidated total 18.8 bn 20.0 bn 21.0 bn Consolidated total (before goodwill amortization) 21.9 bn 23.9 bn 24.8 bn *1 The 2011FY figure lacks continuity with the figure announced last year due to retrospective adjustment. *Assumed exchange rates: : US$ = 81, CAN$ = 80 24/25

25 To make people s lives richer and more enjoyable. The earnings forecasts and forward-looking statements appearing in this document were prepared by the Sapporo Group based on currently available information and its best assessment of potential risks and uncertainties. Actual outcomes may differ materially from forecasts due to changes in various underlying factors. 25/25